BEIJING — U.S. semiconductor leader Nvidia is yet to reclaim its lost sales in the Chinese market, even as some restrictions eased by Washington. The company expresses concerns over heightened competition from Chinese counterparts.
"Although small quantities of H200 semiconductor products for customers in China received U.S. government approval, we have not generated any revenue," said Nvidia's Chief Financial Officer, Colette M. Kress, during an earnings call, as per a FactSet transcript. "We remain uncertain about the prospects of importing into China," she added. Nvidia's data center revenue once relied on China for at least 20%.
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Previously imposed U.S. export controls necessitated Nvidia to create a less advanced chip, the H20, for the Chinese market. However, new regulations in April halted those sales until December, when then-U.S. President Donald Trump permitted the shipment of the advanced H200 chip to China, contingent on a 25% U.S. sales cut. Nonetheless, sales remain static due to security scrutiny in both countries, despite Nvidia CEO Jensen Huang's lobbying efforts in Washington, D.C., and a recent visit to China.
Global AI Disruption
The semiconductor titan also sounded alerts about the increasing competition from China, the world's second-largest economy. "Our competitors in China, backed by recent IPOs, are advancing and could potentially reshape the global AI industry's structure in the long run," remarked Kress. She advocated for the U.S. to encourage every developer and business worldwide, including those in China, to adopt American technology.
Several Chinese AI chipmakers and developers have become publicly listed in Hong Kong and mainland China in recent months. Expectations that these companies might offer alternatives to U.S. AI technology have driven the stocks, including MiniMax and Moore Threads, to surge post-IPO, though not all have sustained growth. OpenAI CEO Sam Altman praised Chinese tech companies' progress in a CNBC interview on Feb. 19, acknowledging their proximity to the technological frontier in certain areas. Although Chinese AI companies slightly trail the U.S. in capabilities, their solutions are typically more affordable than American counterparts. "We might see a future where much of the world's population operates on a Chinese tech stack in the next five to ten years," Rory Green, TS Lombard's chief China economist and head of Asia research, stated to CNBC's 'Squawk Box Europe' earlier this month.